Eritrea offers stake in state telco, but not to foreigners

ADDIS ABABA

ADDIS ABABA Eritrea is selling a stake in its state-owned telecom operator as part of plans to boost private investment in the Red Sea state, but the company's chief executive said the offer was only open to domestic buyers.

Africa's rapidly growing telecoms industry has become a symbol for the continent's growth, with subscribers across the continent topping more than 500 million last year versus 246 million in 2008.

However, the Asmara government, widely considered one of the most tightly-controlled and secretive in Africa, is one of a handful to have until now maintained a state monopoly on their telecom sectors. Neighboring Ethiopia is another.

"This ... (will) give it the friendly competitive advantage to remain as a leading player in the context of the growing Eritrean economy even after liberalization of the telecommunications sector," chief executive Tesfaselassie Berhane wrote in an open letter to would-be investors posted on the EriTel company website.

The letter said up to 4.5 million ordinary shares would be available at a subscription price of $50 per share. The offer was closed to foreign investors.

Subscribers for fixed and cell phones had jumped nearly ten-fold to 358,000 in the past 8 years, he said. Eritrea has a population of about 6 million, suggesting significant growth potential.

The sell-off is part of an investment drive that will privatize dozens of state firms in the country, including a brewery and a number of hotels and food factories, according to state-linked reports.

Eritrea is seen on the threshold of a mining boom, which analysts say could drive growth in an agriculture-based economy that often suffers from low rainfall.